Nvidia (NVDA) remains as the undisputed leader of the AI revolution, capitalizing on the insatiable compute required to power the AI models of today and the future. Following its latest earnings report, which exceeded expectations across all key segments, NVDA is trading at a compelling valuation relative to its peers. From a technical perspective, the recent pullback after the earnings report provides an attractive entry point for bullish exposure with strong risk/reward potential. Note, Nvidia was down an additional 3% on Wednesday. If we look at the chart for NVDA, it recently pulled back to its $136 support level, a critical zone that has previously acted as a major support and resistance level. The stock remains in an overall uptrend, outperforming the S & P 500, with relative strength remaining strong. This pullback offers an opportunity to add bullish exposure, particularly as momentum indicators stabilize and suggest a resumption of the prior trend. A move back toward the $156 resistance level could materialize in the coming weeks, driven by renewed investor confidence. Compelling valuation NVDA’s earnings highlighted its dominance in the AI and accelerated computing space. Their Blackwell GPUs are in full production and revenue reached a record $35.1 billion, up 94% year-over-year. The data center segment, accounting for $30.8 billion in revenue (+112% YoY), continues to be the backbone of NVIDIA’s growth. NVDA trades at 33 times forward earnings, a premium to peers but justifiable given its expected EPS growth of 64% and revenue growth of 56%, compared to industry medians of 13.7% and 6.7%, respectively. Its 56% net margin significantly surpassing competitors which highlight why NVDA deserves its premium valuation while still offering substantial upside potential. The trade To capitalize on NVIDIA’s strong fundamentals and technical support levels, consider buying a Jan 17, 2025, $136/$156 call vertical @ $6.68 Debit. Trade Details: Buy to Open 1 Jan 17, 2025, $136 Call @ $9.55 Sell to Open 1 Jan 17, 2025, $156 Call @ $2.87 Net Premium: $6.68 Debit Max Risk: $668 Max Reward: $1,332 Breakeven Point: $142.68 View this trade in OptionsPlay for updated pricing This strategy allows you to potentially profit if NVDA trades above $142.68 by expiration, with a maximum profit achieved if the stock closes above $156. The trade offers a 2:1 reward-to-risk ratio, providing a favorable way to participate in NVIDIA’s expected upside while limiting downside exposure. DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
